Councillors have been told that taking on the i360 even just to appoint a new operator would put too much financial pressure on Brighton and Hove City Council.
Green councillor Ollie Sykes asked what the liabilities would be if the council “exercises its rights” as a creditor.
He put his question to the council’s Audit, Standards and General Purposes Committee at a meeting at Hove Town Hall yesterday (Tuesday 28 January).
The i360 ceased trading last month when the company filed for administration, leaving more than 100 people jobless.
The company that ran the viewing tower went bust owing £51 million after the council brokered a loan from the Public Works Loan Board.
The figure includes interest but the council still has to pay back £32 million at a rate of £2.2 million a year until 2041.
Green councillor Pete West, who chairs the audit committee, said that the council had already started setting aside £1.2 million a year because of missed payments by the i360. But now an extra £1 million would need to be found.
Councillor West said that the council chose not to step in and take on a new operator or run the attraction itself because the cost would be too great.
No operator was willing to take on the i360 with its debt to the council.
Cabinet members agreed to write off the debt last Thursday (23 January) to allow the administrators to sell the viewing tower.
If the council had appointed a new operator or taken on the i360 itself then it would have taken on the liability for staff redundancy costs, legal costs, and payments to other creditors, including for taxes.
The council would also have lost out on business rates. And additional costs would have included bringing in a commercially experienced management team to remodel the business.
Councillor West said: “The venue needs significant investment to change the business model and remodel the venue but again with no guarantee of success.
“The i360 company was not able to raise further commercial finance and the council has felt to not be in the financial position to not take on the financial challenges.
“The council has had to make savings of £175 million since 2014. The i360 debt is not therefore a substantial driver of the council’s financial challenges which have been caused by reducing government grant funding and significant growth in social care and homeless demands.
“The main advantage of sale in administration is the hope that a new operator will purchase the business unencumbered by debt and therefore willing and able to invest directly or raise finance for investment to make the site a success for the area in the city.”
When the cabinet agreed to write off the i360’s debt to allow the sale, councillors were advised that to demolish the attraction would add to the council’s costs, would still leave the loan in place and would result in part of the seafront becoming derelict.
The Labour leader of the council Bella Sankey said: “If the i360 can operate again then it can help bring in business rates.
“And if we proceed with the recommended buyer that has come forward, the city council will get a small share of future revenues.”
And writing off £51million will not effect the council budget??totally pathetic situation the council should never got involved
About £2 million a year until 2040, although this method does allow a new operator to start, and that may create some income to close off some of this debt. It’s the best of a bad situation, having inherited this from the Greens and Tories who voted for this.
I’m glad there is an endpoint.
Pete West… the biggest idiot in the history of councillors anywhere.. everything that is wrong with our political system.
when his decision to remove a whole traffic lane along the seafront during covid proved catastrophic.. he said ‘we’ll tweak the trafic lights’..to solve the problem.. people died on their way to hospital as a result… complete and absolute moron.. it’s a disgrace that he’s anywhere near the decision making process
If this eyesore and an affront to public (opinion) were warned it would not be a viable project can not garner enough interest in it ,,RIP it out!! The council has washed its hands of it,,its us the tax paying locals whom have lost out,so we dont want reminders of cloth eared councillors in full view on the seafront as a monumental cockup
Well, having this edifice as a monument to councillor and council officer stupidity and their demonstrable lack of any business acumen is worth having as a reminder to vote in local council elections
Indeed, the Green councillors who agreed to lend the increased money for this project made a very poor decision indeed. Equates to amount 57p a month per person on services, although the math is a rough overestimate.
Ripping it out, would still mean having to pay for it along with demolition costs, probably more intelligence in letting another operator with a bit more savvy run it and at least get some money back in rates and share of profits.
Whoever signed this off in the first place was obviously on the edge of sanity, clearly couldn’t use a calculator… Would have been better spending the money on extending the volks railway to run year long along the entire seafront.
Don’t forget the Tories role in this.
It only got approved because they voted with the Greens for the £36m loan.
Has anyone asked Jason Kitcat for a statement?
It’s time to individually and collectively SUE all those Council Officers and Councillors, past and present, responsible for making this disastrous decision (and they were told it was financially unviable and the numbers did not stack up up by a significant number of residents and professionals, even before they made the decision, so no excuses).
Readers may also recall Brighton and Hove City Council spending £37k on legal bills to prevent disclosure of the ‘business plan’ to an independent journalist in response to an FOI. Then a few years later it was disclosed anyway, presumably by some WFH office junior who had no idea what strictly confidential information this was deemed and the whole scandal came out.
The even bigger scandal is that £51m would have been more than enough money to recreate West Pier, which would have brought income into this city for generations. And give West Pier Trust an excuse for continuing to exist, having wholly failed in its objective.
You may recall, that I explained why a lawsuit of this nature would likely not go anywhere useful, other than giving some lawyers free money!
On a slightly different note, ever thought about joining the West Pier Trust? Sounds like you’ve got a lot of interest there, and some idea on how to progress it.
The West Pier Trust have been notably quiet about all this.
Do they still exist, and do they still have a place on the balance sheet for the i360 – getting rental money from the land in that area?
If so, would it not be a good idea that they handed back the land to the council, rather than to continue to exist as a money drain and in a vacuum?
If it’s too risky for the council to make a profit then why wasn’t that risk identified before they lent the money out confident it could make enough money to pay back the loan?
What a mess. We need a public inquiry to investigate right from the start…why was the decision made to build this, were there any warnings given to the Council that this might all end in disaster, did they even consider what a ‘worst case scenario’ could be..how can we make sure such a failure never happens again.
Such a disgrace.
Meanwhile, services that aim to help people who live in Brighton and Hove are being cut.
Disgusting.
Comparing the current financial situation of the council with the i360 is a false equivalence. Whilst there is some impact caused by this, the real culprit to services being squeezed is the decade of austerity by the Tories, giving councils less funding year on year, whilst demand for services go upwards.
Maybe make a donation to Scientology and they can get Tom Cruise to have a fight on top of the i360 in the next Mission Impossible movie, make it a world famous landmark that people want to visit like the Eifel Tower. Might need to install toilets on the platform tho who wants to do new years eve drinks or whatever in a pod with no toilet??
Project the names, faces and party affiliations of the councillors who voted for it, onto the silver bagel that is the ring of incompetence.
Public domain information, just look on the BHCC website under the meeting it was decided.
I`m just wondering what an “innovative” business model would be ?
you pay to get in ( after not being able to park anywhere ) you go up and you come down…..it doesnt do anything else……or am i missing something……